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21 company A is a AAA-rated firm desiring to issue five-year FRNs. It finds that...

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Finance

21 company A is a AAA-rated firm desiring to issue five-year FRNs. It finds that it can issue FRNs at six-month LIBOR +12 percent or at the six-month Treasury-bill rate +1 percent. Given its asset structure, LIBOR is the preferred index. Company B is an A-rated firm that also desires to issue five-year FRNs. It finds that it can issue at six-month LIBOR +68 percent or at the six-month Treasury-bill rate +212 percent. Given its asset structure, the six-month Treasury-bill rate is the preferred index. Assume a notional principal of $15,000,000. Determine the QSD.
0.75%
1.50%
1.00%
1.25%
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